Richard Ni (Head of People at Scale AI, ex Head of Recruiting at Cruise)

Hey everyone, this is Erik Torenberg and you're listening to Execs by On Deck. Execs is a show for founders, operators, and leaders who want to understand the playbooks, frameworks, and tactics that leading tech companies today have used to scale. Our guests are tech execs in key roles at top tech companies who share their hard-won, earned secrets on how to scale faster. Richard is the current head of people at Scale AI after being the first recruiting hire at Cruise Automation, where he helped bring the team from 10 to 700 employees.

3 years.

Prior to leading people teams, Richard was an engineer at Venmo and a CS major at MIT. We discussed the unique perspective his technical background gives him in recruiting, how to solicit genuine feedback from employees, and building a leveling system.

I hope you enjoy listening to the episode as much as I did recording it.

Richard, excited to have you on the podcast. Welcome.

Thank you. Good. Excited to be speaking with you today.

So you've helped scale 2 big organizations, Cruise and Scale, on both the recruiting side and the people side. And we're going to dive into the nuts and bolts. But first wanted to start with a higher-level question, which is that you don't have a traditional recruiting and people background. In fact, you're a computer science major. At MIT. What do you think your unique background enables you to see that maybe others don't? And how do you think about as you evaluate other and as you advise founders to evaluate recruiting and people, what's important as it relates to background?

Yeah, so my background, I'm not sure how much people know about this already. I went to MIT, computer science degree, et cetera. I don't think you need to have those qualifications in order to be in a people or recruiting role. But I do think there's a level of analytical rigor and comfort with numbers and data, I think, that comes from that. And I do think at its core, in order for one to be influential and be effective, you need to be able to process, analyze data, and make recommendations based off that, be able to run, you know, controlled scientific— scientifically controlled experiments as much as possible, and be able to say like, this is what we should do and this is why. Because ultimately what your role is as an HR business partner is to influence the business to make the right decisions. You aren't able to just say like, This is my decree. We should do this now. This is our policy, unless it's like, you are breaking the law if you don't do this. But the more interesting insights you can gather are from being able to influence. And I think there's also, I mean, it depends on what your organization's looking for, but I think a level of being able to resonate with the people at the company and being able to speak a similar language to them. And this is through the lens of having worked at 2 very technical companies, a lot of engineers, et cetera. Maybe that's not what your companies need. That's totally valid too.

There's probably a lot of people who have a deeply analytical background, who themselves might be technical, who don't think that the people role is for them, but maybe if they were open to it, they might love it actually. I'm sure a bunch of people have asked you for advice or you've told some people, hey, have you considered this? What advice do you give them or how should people think about that?

Yeah, I'll start off by answering a similar question, which is, how did I get into this to begin with? And for me, it was really just reflecting and being honest with myself about what I was truly interested in. I was thinking to myself, what are the problems I think about in the shower? What are the problems I think about when I wake up in the morning? What doesn't require a lot of mental energy for me to remember? It was always very easy for me to remember different people's names, backgrounds, motivations, but I'd have a hard time remembering different syntax in different programming languages. And so I had to just be really honest with myself because this was a big tough decision, right? Because software engineers make twice as much as entry-level recruiters do. It was a really big decision. That was the first decision I made in my career, but just being honest with myself and saying, this is what I'm more interested in. So, if you are finding yourself to be just interested in people problems, if you find yourself really excited about how this org should be built or how do we incentivize people to do the right things or how do we develop talent, all those things, there is a role for you. And I do think that HR as a function is becoming more, especially at least in my environment in tech in Silicon Valley, it's becoming more and more sophisticated. I think we're getting a lot more excitement from founders and from VCs' talent partners telling their founders, like, invest in this earlier and it can have an impact. And so if you do fashion yourself like an analytical person, I do think there is that appetite. There is going to be that appetite from founders, investors, et cetera, to be trying to convince you to join a people role, and you should embrace that if you can.

Talk about that evolution. What does it mean to say that we are getting more sophisticated, or what are the ways in which we're getting more sophisticated, and what does that look like?

Yeah. So I think very traditional HR is like, make sure the company doesn't get sued. And so my career is not like— I don't know how long that's been, how old school that mindset is, or how many companies take on that mindset or whatever. But it's about not doing things wrong versus doing things right, I think, traditionally. And I think more of the modern companies think about how do we like do really, really well, how to do excellent. Like, for example, uh, one of the things I find really interesting about HR is you, you have to take on different mentalities or different situations. And one situation, it could be very much a do everything by the book, follow these laws, do not break these policies, like don't, you know, minimal deviation. Another, another, in my next meeting, I could be talking about how to build the, um, like performance management system. And yeah, there are some like should-dos and there are some things you obviously shouldn't say, but really it's more about being really creative and innovative and how to kind of get the best to people. And so I think there's more and more of this mindset that HR can be an asset in helping you think about how to develop people, how to grow people, how to get employee feedback, how to organize and structure your company in an effective way, how to think about challenging conversations with the company, like how to talk about diversity, equity, inclusion, for example. And these are very strategic topics. These are very analytical, or it's very important to be analytical and talk about these topics. It's important to be empathetic when talking about these topics. It's not just about like Doing things by the book. Yeah.

And I'm sure there are, when you evaluate people, there are people that— these aren't mutually exclusive, of course, but there are people who tend to be more empathetic and there are people who tend to be more analytical. And so, are the best people a bit of both or the best teams have a combination of both?

Definitely both. And I mean, I do think the two go hand in hand. I think the two are correlated with one another because I think if you are more analytical, you can take your empathy Apply it to a broader group of people. So I think that the two add to each other versus detract.

Totally. You can help redirect misplaced empathy or misunderstanding. Empathy is a short-term construct at the expense of a much larger group or future thing that you're not being empathetic for at the moment, basically.

Totally. Okay.

So the prompt of this podcast is I'm imitating, although not that far from reality, a Seed or Series A founder who has a product that's working, things are starting to grow, just raised a bunch of money, and now needs to build out a recruiting team, needs to build out an HR team, and scale over time. Maybe you could start by talking— we could start with recruiting because that's where you started at Cruise. Maybe you could talk about— but also at Scale, you were there too. What is the first recruiting hire? Maybe take us through What the recruiting org will look like from your first hire and then beyond?

Yeah. So typically when I talk to founders who are making their first recruiter hire, they're usually around 20 people already and they're looking to add about 20 people into the company. Rough, rough guidelines of when that first hire is being made. What I generally advise people to do is to be open to a couple different possibilities and options because you don't need to literally hire a recruiter. I think the most likely outcome to happen is you hire a really eager, motivated recruiting coordinator Someone who can keep organized. And generally, I've seen recruiting coordinators double as executive assistants, double as office managers in the meantime, just so you can hire somebody to start immediately adding value. Because a lot of recruiting is— the foundations of recruiting is just getting the basics right. It's like not forgetting about candidates, being clear about what are the different job descriptions, who's responsible, who's the hiring manager, who's responsible for hiring each of these. Making sure the job is posted on the website, getting back to people, soliciting referrals every once in a while. These are not like— these are logistical tasks. They're not something that requires like someone with 15 years of recruiting experience to do. So I actually think that's the most likely outcome. Like, I have sometimes people ask me like, oh, how do you find someone like you to be like— I want to hire someone like you to be my first grad. I'm like, that's not going to happen. So they're like, that's very unlikely to happen. I generally advise founders to always just be constantly asking that, you know, most impressive people in the network to ask them, hey, who are just the most impressive people? Who should I get to know? And just constantly put themselves in a position to get lucky so they can find someone with a very non-traditional background if they are interested in hiring someone with backgrounds such as my own. But you can't count on that. You shouldn't build your system around that. And so, I mean, you're hiring that first recruiter, you should definitely be open to hiring that first recruiter. But I think the most likely outcome is to hire like that really eager recruiting coordinator. And to develop the muscle first within yourself, but also within the leaders within your company to be that hiring manager. Because ultimately, like, a hiring manager can do all the things that a recruiter does. I don't think it's necessarily the best use of their time, and definitely recruiters have like an expertise that can add a lot of value, but it's not a role that's strictly required for whatever reason. And so if you can develop your hiring managers to take on some of these like more sophisticated recruiting type tasks, like understanding candidate motivations, selling, providing a really good pitch for the company, Things like that, then you can pair them with a coordinator while you hire that recruiter. And do you want me to go into like first recruiter profile or?

Yes, please. Exactly. Yeah, that'd be great.

Yeah. So I think generally people oftentimes fall into the whole like, oh, let me just get someone from a really reputable company. Like, let me get like a recruiter from Facebook, but it's just like a totally different world that they're coming from and they could be very much so a good fit. But I think the key things you wanna look for Are one, you want someone who's adaptable because things are going to change constantly. And you don't want someone who is just used to— and this is just generally applicable advice, I'd say, not specific to hiring a recruiter, but someone who's really adaptable. 2 is someone who can have a very fast learning rate. Goes hand in hand with being able to be adaptive, but it's comfortable with that from a— there's A, comfortable with that, which is adaptable, and B, capable of of thriving in that environment, which I think is that fast learning rate. And then C, it's ideally someone who can sell and build a pitch with your company versus like, oh yeah, well, I'm used to a company that sells itself because it's freaking Google or whatever. And you don't want to fall in the trap of just because they can hire into that big company and they have someone who's already feeding them the narrative that they'd be successful here. And I think regardless of what type of hire, what type of role you're hiring into as a founder, early-stage company, you want Someone who is proactive, who wants to take on ownership. I think you wrote a tweet this morning that was something along these lines, actually, Erik. I was looking at your Twitter before this. And someone who's eager to solve problems versus waiting for problems to be presented to them. So I think that applies here as well with your first recruiter hire.

And let's say we make the first recruiter hire. How should we think about planning for how the recruiting org should scale or what does that growth look like of that org?

Yeah, so I think the small pod team would be like a coordinator. Usually a recruiter coordinator can support like 2 to 3 recruiters. And then in my experience, anytime I brought in a sourcer, so sourcer is somebody who does primarily outreach and the recruiter is someone who takes a candidate through the entire funnel all the way from applicant or outreach message all the way through closing. So a sourcer, sometimes you get the advice like hire a sourcer to generate more top of funnel if you're not getting enough inbound, not getting enough referrals or whatever. I can see situations where that would be very valuable. In my personal experience, I've been fortunate enough to work at companies that have really taken off really, really quickly. And the problem hasn't been, at least at like the 50 to 100% stage, not getting enough inbound or referrals. And so I've had to convert them into full cycle recruiters pretty quickly because there's just so many different hiring managers that need support. So, could hire a sourcer. Once you hire a couple recruiters, you might end up finding yourself converting that person to recruiter anyways. And then you want someone who can be a leader. It could be your head of people. It could be your head of engineering if they're really recruiting inclined. It could be someone dedicated to be your first recruiter, to be somebody who has managerial strategic experience, who's willing to roll up their sleeves and get their hands dirty. So there's a variety of different profiles that could work out, but it's about understanding the failure modes of each and being able to support them and complement them with other people.

And when you've been through that growth and the problem is just being able to handle all the inbound, have you ever just taken someone else from somewhere else in the org and said, hey, for 3 months, you're just focused on recruiting?

Absolutely. In fact, that's how I got into recruiting to begin with was, so my older brother was one of the first engineers, like one of the first 5 engineers at Dropbox back in 2008. And I would not, I think, have been so comfortable going into recruiting myself as a full-time job if he hadn't been selected to be the— so he was like a real engineer who was building a lot of the core features for Dropbox back then, but he ran engineering recruiting for a year. And I don't think I've done anything as extreme in my career in my companies, the companies that I've worked at, but that is certainly something that companies do. I think the most successful companies are the ones where there's somebody from the team itself, it's typically engineering because the close rates are— it's just so much harder to close engineers, who is deeply invested in the hiring process. I do think that's a magic combination. So that's probably even more important quite frankly. an engineer who's just really excited about this problem and throwing them at the problem is more important than whoever you hire to be your first recruiter. Yeah.

And how about as you're growing your team, maybe you're a Series A, Series B company or beyond, when are you really hiring your most senior recruiter or your VP of recruiting? What does it look like at more executive level?

At the executive level, I think you should be open. But I mean, I've worked at companies that have grown so quickly that what you need for your VP, it changes after a year. And the classic problem is how much are you solving for today versus for A year or 2 from now, because someone who's really successful 2 years from now is not necessarily going to be the person who's successful today. So I think it's one, understanding your growth rate. And I think you want someone who— I think it'll be good if you get someone who you think will do a great job for the role that is needed for the next 18 months. And if they can last longer than that, great. Although it might mean you're not growing as fast as you might want to if they are still able to do that in 18 months down the road. It just really depends. But I would say you hire your director of talent once you bring in more than 50 to 100 people per year. Someone who maybe not literally has the title director, but someone who can set the strategy and independently run hiring, who can build the OKRs for the team, who can do the planning, et cetera.

Yeah. There's this adage, of course, hire slow, fire fast. But during hypergrowth, you don't have that privilege. So Keeter Boye has this thing of get to 70% conviction and then pull the trigger and don't aim for zero defect hiring. What is your framework or philosophy on hiring during hypergrowth?

Yeah, no, I agree with that. I haven't heard that literal, but I think that makes a lot of sense. I mean, everyone loves to say that bad hires are super expensive. It's true, but in practice, you're not going to know for sure. And especially when you're in the early stages of a company, you likely have— I've seen it in my career a couple of times— is you have people who are really, really great early employees with a lot of influence, but then you need to bring in people who might not have as well-rounded of a skill set as they do. They might not have the exact same attitude, but they're still really valuable. And so you're not going to have this objectively correct definition like, this person has an 85.5% risk of being a poor hire or whatever. It's just not going to happen. So you just need to be comfortable with the unknown and taking some risk.

Yeah. And so when you advise startups, seed, Series A, maybe they're not growing as fast as Scale or Cruise, but they're growing, they're doing well. What mistakes do you see them typically make or misconceptions as they start to build out their recruiting processes and org? Where do startups get tripped up?

Honestly, I think the biggest thing is if you just focus on getting all the basics right, you're ahead of 80%. So just have someone who can follow up with people. Sometimes I get questions like, how do you craft the perfect job descriptions? Don't worry about that. 80/20 of that, that's not going to ultimately matter that much. If you get all of the basics right.

And so the basics are don't drop balls, have a very consistent process, make sure everyone knows what the process is. What are the basics?

Basics, I would say. So first, when it comes to top of funnel, have a little bit going in each of the sources. So the 4 different, the way I think about how to categorize the 4 different sources are inbound, that's applicants, outreach, which is sourcing, reaching out to people, LinkedIn, whatever other methods. Referrals is a big one, especially in early stage company. And lastly would be events. You could also classify agencies. I'd say that's like a 5th, or it comes at, or that's like similar sourcing. And so have some intentional strategy for each of these. Have like, maybe it's like, okay, like we're really big on referrals, so that's when we really dive in. dive deep in, but like we wanna have some imbalance. Let's make sure jobs are posted on, um, like for a general job on LinkedIn, for a more niche job, like you're looking for a robotics engineer, maybe post it on like Robotics Worldwide Forum, whatever. Like just have something going in each of these categories and really dive in on one of them. That's like the top of funnel. And then mid-funnel, it's the just knowing like what the process is.

Yeah.

And who should, like, who is the next step? You waste a lot of cycles just being like, oh, I thought this person was supposed to speak this. Oh, I thought this person was supposed to speak this next. Oh, this person was a maybe. Who gets to decide whether they move forward or not? You just waste a lot of time with that. So that is like, focus on that, get that right, and you'll be ahead of 80% of companies out there. Totally.

I resonate there. How about on referrals? What have you seen work really well in terms of how companies can incentivize referrals among their team?

Yeah, I mean, the best way is just to have a company that people are genuinely— think about it from the lens of how do I get people to be really excited to work here? Don't worry about how do I get them to submit a lot of referrals, and that problem will solve itself. I mean, you want to do what I think of nowadays as the basics would be having a referral incentive. So $5,000 referral bonus, I think it's pretty common at this point. And having a clear— just lowering the barrier to entry, but without making it total spam fest. So by lowering the barrier to entry, I mean being clear, like, this is how you submit a referral, go into Lever, here's a how-to guide. Or like, just when I was doing it here, like, just slap me the name of the person, I'll follow up with them. Just make it really easy for people to do it. I think those are the 2 like referral-specific things you do. But otherwise, you just like make your workplace genuinely awesome and have people like genuinely want to like refer people. Oh, and then maybe like every couple all-hands or so, go over a list of like roles that you are looking for. Like, here's top 2, like please submit referrals for this one.

Right. Yeah. And yeah, we certainly celebrate at all hands the people that get the referrals and make that high status. There's another adage that early on in the company, you're hiring generalists, often younger folks, and then as you're growing and over 50, you're hiring for more seasoned specialists. Is that true in your experience? How did that evolve at Cruise at scale?

Cruise had some roles that were more— Cruise was working on self-driving cars. We needed specialists, people who were computer vision experts, Controls experts. So we needed specialists. At scale, we didn't need as many specialists. We need people who are really strong problem solvers, fast, et cetera, et cetera. And so I think it just comes down to the needs of your company. I think if there is a more common failure mode, generally speaking, I think people probably— it's more likely to focus on the specialist. And so err on the side of the generalist, but depends on your situation. Totally.

How do you teach recruiters how to sell?

Yeah. And this is from the lens of I'm a founder, I'm an early employee and trying to— so that's a good question. I've always had it from the lens of I'm the recruiting leader. If I'm advising a founder on how to— let me think about this for a second. And I would say maybe don't even think about necessarily as how do I teach the recruiter how to sell, but generally how do I teach the people at the company how to sell? Because every person every person should be selling in some capacity. Every interaction, whether you like it or not, is a—

Yep.

A conversation where the candidate is evaluating the company. And so I would say focus on like, do the people at this company know the narrative for why this company is going to be successful? What is our strategy? What is our plan? What is our vision? What could go wrong? Focus on, you know, every— I think at scale we're doing it like we have some light version of this every, every month or so, and then like one like quarterly Recap, usually after a board meeting, we present this. What we talked about with the board. This is like what our next steps are. This is our plan, et cetera, et cetera. And so, if you have that down, I think that's the foundational step in thinking about like how do we just educate people here versus like teaching like recruiters specifically how to sell. Then you can get into the nitty gritty of like some individuals might not have that social skill. They might not be totally comfortable. And then there's some like tactical. Like I have done like. Trainings with interviewers of like, spend the first 5 minutes, they just put together a doc, spend 30 minutes with them, get one of your interviewers who's really good at selling in the conversation, work with them, maybe get a hiring manager and work with them to build that little talk track. But the basics would be like, in an interview, spend 5 minutes at the beginning introducing yourself, asking them about how their day is, asking them if they need to go to the restroom or take a break between meetings. Then diving into interview questions, leaving 10 minutes at the end. So that's more tailored towards interviewer training versus how to teach recruiters how to sell. But I'd say my advice for a founder would be focus on people actually understanding, the entire company understanding how to sell versus don't worry too much about the recruiter in particular.

Let's stick on the founder advice for a second because people say founders should spend a significant amount of time recruiting, 50%, whatever, some large percentage of their time recruiting. And then the question is, okay, how do you best use that time effectively? Because there's a variety of different ways that one could be spending their time. How do you advise founders on how to think about that?

Yeah, a few things. So, you know, where can you add the most leverage? Easiest would be closing. It's very concrete. If you have candidates at the offer stage, you prioritize, you figure out how to trust, who to trust when they're telling you, like, prioritize this one, close them. You know, at the beginning, you can probably close every single candidate yourself, have conversations with every single one. Towards the end, you need to figure out some way of prioritizing. Another would be generating Creating top of funnel that's unique. Alex, our founder, gives us unique access to certain people. Some of the strongest people we brought into Scale have been directly through his network. And he generates that network through, well, one, just constantly meeting, networking himself. And when he meets an impressive person, asking that, sharing information about Scale, not explicitly saying, please submit referrals to me, blah, blah, blah. That's super robotic, but just forming a good impression of himself, sharing a little bit about the problems that we're facing. Saying, hey, if you know anyone interested, love to chat with them about this, or I'd love to pick their brain about that, and then bringing them in. So that's another way you can add leverage. And then third, you don't need to necessarily do this as a founder. Your head of recruiting or head of engineering could do this, but pulling in your people who are invested in your success, the investors, early-stage investors, your VC talent partners, whatever, and just keeping you top of mind for them. So like, hey, here's like every month or so, like, hey, here's like a really important role for us right now. I'd love if anybody you have in your network keep us in mind.

Yeah.

That's another way you can multiply your impact.

That makes sense. When should a founder start thinking about building their executive team?

When should they start thinking about it? Well, I think quite early. But how should they start? How should they start thinking about it? That's a good question. I think by the time I've gotten to each of my companies, they were— so Cruise was 10 people. I mean, I was a new grad. I wasn't helping our founders think about how to build their executive team at the time. Scale was already 25 people, and Alex certainly already thinking about building out his It's his executive team. So I'd say like around 10, you start thinking about how to think about it. There's what do I need in the next 18 months? And you're not gonna be able to hire like the full team, right? There's like what complements this team the best? What am I really excited about and what can I drive myself? What are the people here? What is somebody who can fill this gap? Maybe they're not like our long-term VP of blah, blah, blah, but like they can do a great job and I wanna invest in their success. They feel like they're getting a lot of growth here. And like, where do we have the need? So really it's not just building this exec team in a vacuum, but assessing where you are specifically in your specific situation and what you need and what complements your team to start off with. Then it's when it comes time to actually make this hire, you probably realistically, like you want to be open to like, you know, like multiple searches at the same time, opportunistically talking to multiple, but like you're really only going to have time for like a couple, 1 to 2 at most, like really concentrated exec searches at a time. And I generally would advise working with an exec firm. You know, the general cost, you're looking at something like $100,000, roughly like 33% of first-year salary for making an executive hire. And in terms of paying the agency fee for that executive hire, and oftentimes it's retained search, so you're paying them whether you make the hire through them or not. But I think it's well worth it, not even if they don't end up— you don't end up hiring someone that the exec search firm sends you, but just to get you a lot of reps and at-bats. And this could change if you're like, you know, the 4th-time founding company, you don't need that. But if you're like, Newish to founding, just get your at-bats in, talk to a lot of people, take some people through the process, and I think it's worth the money.

Yeah, that makes sense. Let's segue into the people. We talked about bringing people in. Now let's talk about retaining people. Maybe start with how to build an HR function.

Yeah, just from the beginning. So I would say your first HR hire typically comes after your first recruiter. I mean, if you're growing, it's like you're unlikely to regret— if you hire the right person, you're unlikely to regret making the HR hire. They're not going to be the reason why you aren't successful. So if you— I would say, again, opportunity to see, be open to whatever. By the time you're 50 people, you should definitely have a dedicated HR hire. That would— I would say is like the latest you should bring in an HR hire. And you can do it as early as, I would say, 10 people. And if you're doing it at 10 people, they should be willing and able to do other things beyond HR. Because you don't want someone who is over-engineering processes that won't actually be followed. Like, sometimes I get founders asking me like, oh, like, you know, we want to start building career guides. We're a 10-person company and levels. And like, it's slow the roll. Like, people joining a startup should be able, ready, excited about ambiguity and not need that level of being told to them what success looks like. And so you don't want that HR hire like over-engineering these things or like, You also need to be able to be comfortable with some level of risk. Ultimately, it's not about following every— there are some pretty obscure laws out there that most companies don't follow, quite frankly. And it's okay because no one's really going to get hurt if you don't follow. I'm not talking about harassment type, but like a certain sign you need to have on this door, things like that.

Anyways.

Yeah. And so you don't want someone who's just constantly finding work where there really isn't work to be done. So earliest 10 people, latest 50 people will be my guidelines. And you want someone who can be a generalist to start off with and someone who is able to— and you want to know exactly what skillset are you complementing? Are you in an industry where it's really important to have everything right from a compliance standpoint? Or is it more about someone who can just handle the variety of things that can happen? It could be combination of workplace/office management/events, or it could be actually you have some high potential people who expect a lot of growth and you really want start investing in feedback systems, performance management systems, feedback, bidirectional feedback, both getting feedback from your employees and also giving them feedback so they know how to grow. So first off, you're asking is, what problem am I really looking to solve and what are the needs of my company? Realistically, in practice, you're probably going to not end up— you're not going to hire someone who's specialized for any of those things. You just want to try to hire a good generalist who's able to handle whatever comes your way. Once you're at about, I think an early stage company, the general ratio, it'd be 1 HR hire. So HR, not including recruiting, not including office management in the workplace, 1 HR hire for every 50 employees. I think if you're at 3 HR people at 100 people, if there's real work for them to do, it's not like you're— that's not one of the reasons why your company's going to fail. But that's the rough heuristic you're looking at. And I think by the time you're 100 people, you should definitely have somebody who is that dedicated strategic HR leader. Not just the executor, but I see more and more often companies making that hire at 25, quite frankly, so it's not unreasonable. Yeah.

And talk about what to look for in that hire, how to get that right, a more senior one.

Yeah. So more senior ones. So you want someone who understands that they are a business leader. And so first off, someone who you can communicate with, because your senior HR hire is your business partner ultimately. You want someone who you feel comfortable being very honest with, You want someone who won't judge you at your worst self and just someone who can work with— I mean, this is generally true of any executive hire. Make sure there's someone you can work with. But I think it's extra important in your HR person because that should be your advisor, advisor to your business. And you'll be able to have that balance of give and take where you can be like, this is how our business needs to be run. But also that like, hey, I understand that you have our best interests at heart and me making this decision that you recommend will be the best for this company in the long run. So that's first off, business value. personality and personal fit. And then you want someone who's able to be strategic, analytical, and bring in those impressive HR people, not your traditional playbook followers, but that HR leader who can attract your much more creative problem solvers and thinkers. You are going to need— it's very valuable to have someone who just is excited about HR operations and someone who makes sure you do your benefits correctly and payroll is run effectively. That's super valuable as well, don't get me wrong, but that's not the number one skillset you need in your VP of People.

Yeah. And what mistakes do you see people make when hiring their VP of People, or what's the way to get that right in terms of—

Yeah. So what I've seen companies regret their VP of People hire, it's when they've brought in that traditional person who says, well, this is just how the way things are done. Typically, I'm talking to founders of companies that like to innovate more and stay on top of the latest. And things change. Like, someone who is a VP of People has 20 years of experience, like, 10 of those might have been like super— like 15. Like, at this point, like, HR tools, like, evolve pretty quickly. I'd say in the last— they need to be up to date with the last 5 years, certainly. And so, the failure mode would be just that pattern matcher, that someone who doesn't know how to adapt or Or stay on top of the latest.

We're 250 people now, no VIP people. We're feeling the pains significantly. Let's dive into some of the major areas that would fall under these roles. Maybe let's start with how to build a culture or build systems processes around employee feedback. What have you seen done well or what mistakes have you seen to watch out for?

Yeah. So the biggest thing is you want to, um, you want to have people to feel comfortable being honest. So you need to be upfront with exactly what they're signing up for. Is this an anonymous survey? And if it's not, you know, why is it not anonymous? That's one. The second thing is to be able to actually act on the feedback that you gather. Uh, I'd say a common failure mode for very well-meaning founders, leaders, whatever, is they just want a ton of feedback and they genuinely care about improving change, but realistically, they're not being able to make these changes at the pace. So you're like collecting feedback every 2 weeks and you're just getting this feedback fatigue on both levels. Employees are like, I gave this feedback, nothing's changed. And the flip side, founder is like, oh, I can't make all these changes. So only solicit feedback that you can actually follow up on and action would be the number one piece of advice I'd give. That's the most common failure mode of very well-meaning people. And the number 2, which is honestly more important than number one, but less common failure mode is Let people be— make sure people are going to be rewarded for honesty and not punish them for telling you things you don't want to hear. And that is a combination of one, sending— being very clear, like, this is anonymous feedback. We're doing cohorting. You're not going to be able to identify you based off blah, blah, blah. And then 2, when you are getting feedback, ultimately, in order to get the richest feedback, it involves a conversation and back and forth. If they say something like, that's not true, I don't like that, you are wrong, like not saying that in the moment. And I definitely made this mistake in the past, not being defensive, not saying that moment, just thank you for your feedback. Take some time, process it, follow up later. I appreciate X, Y, and Z. I wanted to understand more about A because I thought blah, blah, blah. But don't rebut in the moment.

Yeah, that makes sense. Let's get a bit more tactical. How about around building career ladders and performance review systems?

Yeah. So, um, I think the first thing to ask yourself is your performance review system, what is the problem that you are looking to solve? Is it— and performance review systems usually, uh, achieve multiple purposes. And so the, the main purposes would be, one is giving feedback to employees, 2 would be promotion decisions, 3 is like giving them a rating or a ranking, and then 4 is informing their compensation.

Uh-huh.

These things are all very correlated with each other, but you make different design decisions for your process. Based off of which one you're really optimizing for. In early stage, I believe it's most important just to optimize for giving feedback for people to grow and feel like they're growing. Not for this very sophisticated rating system, not for very formulaic compensation decisions. Just do something simple and consistent. And so my suggestion would be understand exactly what you're optimizing for with your performance management system. And most likely it'd be giving feedback to people. Giving them feedback from a diverse set of people that they work with. So, you know, collect some peer feedback, get— have the manager deliver that feedback. Have ideally your HR person is someone you trust to like actually scrub and review all the feedback and like add to it. Wow, I forgot I did this back in the day when we had like our first couple performance reviews. I would read every single— every single feedback synthesis written by every single manager and compare it against the feedback that was coming from their peers to see if it captured the main themes and to make sure that nothing was said in a very hurtful, unnecessarily hurtful way. That's probably overkill in retrospect, but it'd be good to have someone sanity check all the feedback that's being delivered. And on a very, very tactical level, I think Lattice is the main tool that most companies use. I'd say Lattice is very, very functional. There are others out there. I don't even remember which ones I evaluated in addition to Lattice. 2 or 3 years ago when I did this. And then prior to that, I would just say Google Sheets. Yeah.

Shout out to Lattice. I'm an investor there and the other. Awesome. What are your philosophy on leveling?

I'd say don't do it too soon. And I'd say, what is too soon then? I'd say at a minimum, it should be at least 50 people before you introduce granular levels. You should have the type of company where you should encourage the culture where every person is focused on maximizing the pie and You want them to trust, and you want this to be true, that if they're focused on delivering value for the company first and foremost, then that will lead to success for themselves. Now, you want to believe that. You also want that to be true. So, like, you know, take this very directional piece of feedback with a grain of salt, or directional advice with a grain of salt. I think historically it's been a lot more likely that companies do this too late. And what I've seen in the last year or two, that it's more likely that companies would do this too early. And then my second thing is no one is going to get this exactly right. To start things off, 2 things. One is getting a career ladder from another company, ideally a company that's a couple years, just a couple years beyond where you are today, and get their general career ladder. You can either get, if they have a generalized ladder, get that. If they have the eng one, that's usually the one that you can turn into a generalizable one because usually it has more specific things you can just scrape off. For other roles. So get one of those from another company. We worked with a comp consulting firm to, one, like help level all of our employees and for the sake of mapping them to the right comp bands, because you can't have pay equity without knowing where people are leveled. And so we did this around, I want to say like 80 to 100 people or so, and it was worth it, I think, to have that sense of, because we did identify some people who were underpaid, did identify a couple biases that we have, forced managers to think through really the performance of their— it could be a forcing function thinking through who their strongest performers are and where their relative strengths and weaknesses are, et cetera. So that's generally how I think about leveling. I feel like I've lost track of the initial questions. I want to pause here. Hey everyone, this is Jackson. I'm the producer for the show. Quick interruption. Sorry for this timeout. Erik's next question is about comp and general frameworks for thinking about it, and Richard gives an awesome answer. Just want to caveat that we recorded this episode in December and it is now March of 2022. So when Richard refers to the hotness of the market, just keep that in mind.

Thanks. How about comp in general? What advice do you see you giving founders who maybe they start the company, they're not thinking super sophisticated about comp, but then they realize, okay, now we've got to start to really implement a system here, process, bands, et cetera. How do people get a comp system right?

Yeah, it's tricky. So I don't know if anyone feels like they have the perfect comp system. So what you're trying to balance is budget with retention and people feel like they're being treated and paid fairly. And within your budget, there's generally 2 broad categories of budget. There's your salary budget and then your equity budget. So I'd say one, ideally align with your investors, your board members, whatever, on what is target dilution. Once you have that, have a very high-level hiring plan. Do a very high level of like, hey, we're trying to bring in X people here. This is the average buckets. Here's 3 executive roles. I'm going to allocate roughly this amount to equity-wise. Here's 30 senior roles. Here's the rest are junior roles, whatever. And do this very high-level budgeting exercise. Similarly on the salary front. And then When it comes to paying people fairly, so my thoughts have evolved on this over time. I think mostly because the last— I mean, the market's changed a lot. We had COVID and things really slowed down. We've come out of COVID and it's a very hot market right now. And so my general advice is to be clear about what the system is. I will admit that I don't think we've always been, here at Scale, been clear about what the system is and how people can get promoted, how people can get additional comp. what your philosophy is. Uh, I do— like, if you're the founder, you really most likely don't have time to be like thinking through all this stuff yourself. So either like have, you know, this might be a good interview question for your VP of people, quite frankly, or like you bring a consultant to do that. But realistically, you're not gonna be able to do all that. But I think, um, the one takeaway would probably be communicating what the system is and having it be a consistent system, acknowledging that it's an evolving system, and here's your plan to improve it. Uh, it is more important than getting this hyper-optimized system that really perfectly balances like the budget Relative to who's getting what. And I think I probably did too much of the latter, quite frankly, when I was doing it.

Yeah, makes sense. We've talked about a number of very specific items. What are other things from your time, whether it's at Cruise or at Scale, whether it relates to recruiting people or retaining people, that you guys think you did well? Or either whether it's tips or frameworks or tactics that other companies could learn from?

What did we do well? I'm always thinking about what we should have done better, could have gone better. What actually went well? Surely many things did, or else we wouldn't have gotten to where we are today.

What was special, huh?

There must be some things we did well. I mean, I will say, this isn't like directly answering your question, but one thing that came to mind is, I mean, if your business is successful, it's good for people. So, if you're thinking, don't think about those 2 as like separate. You know, when people are upset or complaining, they're unlikely to be saying like, gosh, I don't work hard enough. But at the flip side, people will leave because they don't see the company growing. And some amount, I mean, at some point diminishing returns on hard work, et cetera, et cetera, don't get me wrong. But if you're making your business successful, it's a flywheel that runs itself where you are able to attract more talented people and they're more likely to be great people that other people want to work with. It solves itself. But you don't want to be entirely dependent on business success, obviously. Business success helps with people's success. I think on the hiring front, I think the best thing we did well was the founder made it clear that hiring was really important and demonstrated that through his actions. We had time to talk about it at all hands. I was giving reports and metrics updates. He would demonstrate through his actions that he would prioritize it by moving something on his calendar to make an interview with the candidate, things like that. Not all the time, obviously things happen. But ultimately, as a founder, you want to be exhibiting and rewarding the behaviors that you want to encourage in the people at the company. So that's one of them. Alex at Scale wrote a really great— when I was here, he'd already had this memo he had written about hiring 101, and it demonstrated that he was thinking a lot about it and he was spending a lot of his time on it. And if he's spending his time on that, then it's worth spending time on it. I do think hiring is one of the most impactful things, obviously. My role. I'm going to be saying that, but I genuinely believe it. So, yeah.

What can we learn from his hiring memo? I loved his blog post on hire people who give a shit. What else is in that memo or have you learned from him at all?

Yeah. Actually, let me answer the question in a different way. Let me go through— there's a different doc that I'm realizing he wrote that I think was more useful to talk about. So, there's one thing that he wrote was the types of people we want to bring into SCaLE. And he wrote that, and this is like Very similar to— it was an early version of writing your company values. Because ultimately, if you like the types of people you want to hire, you're essentially saying like, what do you value? What's your company value? So, he wrote that. There were 4 things on it. The one I think that resonated the most with me that I really liked was people having an internal locus of control. So, people who have an internal locus of control view themselves as people who can change the world, change their environment, who view themselves as being able to control outcomes versus external locus of control. I mean, people who think things will just happen to me and I have no control over it. And you want people who, A, believe that the company can change the world, and B, who err on the side of, I can change things within the company.

Thanks for listening to today's episode. Execs is produced by On Deck, where top talent goes to start companies, find their next roles, or invest in their careers. If you're looking to start a company, uplevel your career, or navigate a career transition, I encourage you to visit beyonddeck.com. See you next time.